Supreme Court overturns N22trn Judgement against Union Bank

The Supreme Court of Nigeria has finally quashed a staggering ₦22 trillion judgments entered against Union Bank and other parties, bringing an end to a 25-year-old legal battle that had cast a long shadow over the bank’s financial stability.

Delivering the lead judgement, Justice Stephen Jonah Adah, backed by four other Justices, ruled that both the Federal High Court and the Court of Appeal erred in their earlier decisions by failing to adhere to established judicial precedents. Justice Adah expressed regret that such a “simple matter” had dragged on for over two decades due to judicial missteps.

“This prolonged litigation is a result of non-adherence to settled principles of law. It is unfortunate that a matter that ought to have been concluded expeditiously was allowed to fester for so long,” Justice Adah said during the Supreme Court’s final ruling on Friday, April 25, 2025.

The apex court’s decision is a major relief for Union Bank, its auditors, rating agencies, and the Central Bank of Nigeria (CBN), all of whom had expressed concerns over the potential impact of the enormous judgment on the bank’s “going concern” status and the broader financial system.

The dispute stemmed from a suit filed by Visana Nigeria Limited, which alleged that Union Bank was indebted to it in the sum of $7.6 million as of December 1993.

Visana claimed that the debt arose from transactions with Metalloplastica Nigeria Limited, a borrower from Union Bank.

Visana challenged the validity of a Deed of Debenture dated February 24, 1989, under which Continental Merchant Bank appointed a Receiver/Manager over Metalloplastica’s assets, arguing that the Debenture was invalid because it had not secured the prior consent of Universal Trust Bank, Union Bank’s predecessor.

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On December 16, 2014, the Federal High Court ruled against Union Bank, awarding Visana $7.6 million plus pre-judgment interest compounded monthly at 4.25 per cent from January 2000, and post-judgment interest at 10 per cent per annum — leading to a total liability that ballooned to over ₦22 trillion by 2024.

Union Bank appealed to the Court of Appeal, which in April 2021 slightly moderated the judgment.

The appellate court reduced the liability to $365,605.32, with pre-judgment simple interest at 4.25% per month from December 31, 1993, to December 16, 2014, and post-judgment interest at 10% per annum.

In its Friday ruling, the Supreme Court set aside both the decisions of the Federal High Court and the Court of Appeal, affirming Union Bank’s arguments that the lower courts had failed to apply well-settled legal principles regarding debentures, receivership, and debt recovery.

“It is not enough for a plaintiff to allege a debt and seek astronomical compounded interests without clear contractual basis,” the court stated in its ruling.

The judgment brings closure to a protracted litigation that began in the late 1990s and provides significant relief to Union Bank, especially amid broader efforts to strengthen the Nigerian banking sector.

Legal and financial experts hailed the Supreme Court’s decision as a major victory for the rule of law and banking sector stability.

“This judgement restores confidence that Nigerian courts will uphold commercial reasonability and prevent undue liabilities that could destabilize institutions,” said Emeka Nwokolo, a banking law specialist based in Lagos.

Financial analyst, Funmi Adeoye, added: “If allowed to stand, the lower court’s awards could have set a dangerous precedent, encouraging speculative claims and threatening the health of banks, particularly in today’s fragile economic climate.